The $21 Billion Debt That Most Illinoisans Know Nothing About

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Authored by Ted Dabrowski and John Klingner via,

Illinoisans hear plenty about the state’s ballooning pension debt, its billions in unpaid bills and rising bond debts. In fact, many even know about the local pension crises playing out in cities like Harvey and North Chicago.

But most don’t know that the state’s 860 school districts have put Illinoisans on the hook for another $21 billion in debt. In 2002, it was just $12.3 billion. That growing burden is just another reason Illinoisans pay the nation’s highest property taxes.

Illinois has far more school district debt, measured on a per student basis, than its neighbors, with the exception of Indiana.

Illinois, with $10,400 in debt per student, has 70 percent more school debt than Wisconsin, 44 percent more than Iowa and 33 percent more than Missouri. Indiana’s debt load is just 2 percent more than Illinois’ own.

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And just like pension debts and unpaid bills, Illinois’ school debt has been on the rise. Total debt across the state is up about 70 percent since 2002. Back then, the debt equaled about $6,100 when measured on a per student basis.

That increase could be explained if Illinois was a fast growing state with many new students and a need for more infrastructure. But the opposite is true. Illinois’ student population is flat when compared to 2002.

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Debt limits

School districts are limited in how much debt they can accumulate – not that it’s stopped many from going far over what the law allows.

The limit is calculated as a percentage of the taxable property in the district (the Equalized Assessed Value) – 6.9 percent in the case of elementary and high school districts and 13.8 percent for full K-12, or Unit, districts.

Across the state, 72 districts exceeded their allowed debt limit as of 2016. In sum, their debts are nearly $1 billion over the limit. That’s according to a FOIA from the Illinois State Board of Education.

That’s only possible because the debt limit the state imposes is full of exceptions and loopholes.

Some school districts have used referendums to go over the allowed limit. Others, such as Waltham CCSD 185, got the legislature to carve out an exception for them.

In all, nearly 5 percent of the state’s total school debt has been issued above prescribed limits.

The state’s 20 biggest offenders, based on how much their total debt exceeds their individual limits, are shown below.

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Ford Heights SD 169 is the biggest offender of all. It’s a tiny district of less than 500 students that’s managed to amass over $20 million in long-term debt,  over nine times more than its legal limit.

Attempts to limit school debt recently failed in the legislature. HB 5572 attempted to:

  • Limit borrowing periods to 20 years instead of 25;
  • Offer more transparency on total bond costs to taxpayers;
  • Add a requirement to include interest costs in the debt limit;  
  • Include other forms debt in the limit; and,
  • Require that any referendums for new debt in excess of a district’s debt limit pass with a three-fifths majority.

Seems like a reasonable set of reforms. But Illinois politicians on both sides of the aisle, backed by the education establishment, won’t accept even these common-sense proposals.

Is it any wonder why? With school districts having already driven Illinoisans’ property tax burdens to the highest in the nation, taking on debt is one of the few remaining options district officials have to access additional funding.

Additional transparency – like letting taxpayers know just how much debt they’re taking on – is simply too much to ask.

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